THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

This Letter of Offer is sent to you as a Shareholder(s) of MphasiS BFL Limited. If you require any clarifications about the action to be taken, you may consult your stock broker or investment consultant or the Manager to the Offer / Registrar to the Offer. In case you have recently sold your Shares in MphasiS BFL Limited, please hand over this Letter of Offer and the accompanying Form of Acceptance cum Acknowledgement, form of withdrawal and transfer deed to the member of the stock exchange through whom the said sale was effected. 

TH HOLDINGS (as the Acquirer)

Registered Office : Les Cascades, Edith Cavell Street, Port Louis, Republic of Mauritius Tel : +230-212-9800; Fax : +230-212-9833 along with

ELECTRONIC DATA SYSTEMS CORPORATION (as the Person Acting in Concert)

Principal Office : 5400 Legacy Drive, Plano, Texas, 75024-3199 Tel : +1-972-605-6000; Fax : +1-972-605-5613

MAKES A CASH OFFER AT Rs. 204.50 PER EQUITY SHARE TO ACQUIRE

83,000,000 Shares representing 51.54%[1] of the Share Capital (50.61% of the Diluted Voting Capital), subject to acceptance of the entire Offer Size, of the Target Company

MPHASIS BFL LIMITED

Registered office : 139/1, Hosur Main Road, Koramangala, Bangalore – 560 095 Tel : +91 80 2552 2713; Fax : +91 80 2552 2719

 

Notes:

·    The Offer is being made pursuant to and in accordance with the provisions of Regulations 10, 12 and 21A of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, and subsequent amendments thereof.

·    The Offer is conditional upon acceptance of 83,000,000 Shares (i.e. the entire Offer Size). In case the number of valid Shares tendered in the Offer is less than the Offer Size, the Acquirer shall not accept any Shares tendered in the Offer.

·    The Offer is subject to the receipt of the approval of the Reserve Bank of India (“RBI”) under the Foreign Exchange Management Act, 1999 and the rules and regulations made thereunder for (i) the acquisition of Shares by the Acquirer under the Offer; and (ii) the opening and operation of the Escrow Account and special account referred to hereunder, and other related matters (as described in paragraph 72). The application for RBI approval for opening and operation of the Escrow Account and special account has been filed on April 13, 2006, and the application for RBI approval for the acquisition of Shares by the Acquirer under the Offer has been filed on April 21, 2006.

·    Shareholders who accept the Offer by tendering the requisite documents, in terms of the Public Announcement / Letter of Offer, can withdraw the same up to 3 (three) working days prior to the date of closure of the Offer (i.e. May 31, 2006), in terms of Regulation 22(5A) of the SEBI (SAST) Regulations.

·    The Acquirer can revise the Offer Price upwards up to 7 (seven) working days prior to the date of closure of the Offer (viz. May 25, 2006). If there is any upward revision in the Offer Price by the Acquirer or if the Offer is withdrawn, the same would be communicated by a public announcement in the same newspapers where the original Public Announcement appeared. The Acquirer would pay such revised price for all the Shares validly tendered any time during the Offer and accepted under the Offer.

·    If there is a competitive bid(s): (i) the public offers under all the subsisting bids shall close on the same date; (ii) as the Offer Price cannot be revised during 7 (seven) working days prior to the closing date of the offers/bids, it would, therefore, be in the interest of Shareholders to wait till the commencement of that period to know the final offer price of each bid and tender their acceptance accordingly.

·    There has been no competitive bid as of the date of the Letter of Offer.

·    A copy of the Public Announcement and the Letter of Offer (including the Form of Acceptance cum Acknowledgment) is expected to be available on SEBI's website (www.sebi.gov.in).

 

MANAGER TO THE OFFER	REGISTRAR TO THE OFFER
Citigroup Global Markets India Private Limited Bakhtawar, 4th Floor 229 Nariman Point Mumbai 400 021 Tel No: +91 22 5631 9982 Fax No: +91 22 5631 9803 Email: mphasisbfl.openoffer@citigroup.com Contact Person: Mr. Indranil Ghosh	Karvy Computershare Private Limited Karvy House, 46  Avenue 4, Street No. 1 Banjara Hills, Hyderabad - 500 034 Tel No: +91 40 2331 2454 Fax No: +91 40 2331 1968 Email: murali@karvy.com  Contact Person: Mr. Murali Krishna

 

Activity	Date	Day
Public Announcement	April 4, 2006	Tuesday
Specified Date	April 5, 2006	Wednesday
Last date for a competitive bid, if any	April 25, 2006	Tuesday
Last dDate for dispatch of Letter of Offer to the Shareholders	May 1213, 2006	FridaySaturday
Date of opening of the Offer	May 17, 2006	Wednesday
Last date for revising the Offer Price / Offer Size	May 25, 2006	Thursday
Last date for withdrawing acceptance of the Offer	May 31, 2006	Wednesday
Date of closure of the Offer	June 5, 2006	Monday
Last date of communicating rejection / acceptance and payment of consideration for applications accepted and or return of Shares/ Share certificates for applications rejected	June 20, 2006	Tuesday

 

RISK FACTORS 

·          The Offer is conditional upon acceptance of 83,000,000 Shares (i.e. the entire Offer Size).  In case the number of valid Shares tendered in the Offer is less than the Offer Size, the Acquirer shall not accept any Shares tendered in the Offer.

·          The Offer is subject to the receipt of the approval of the RBI under the Foreign Exchange Management Act, 1999 and the rules and regulations made thereunder for (i) the acquisition of Shares by the Acquirer under the Offer; and (ii) the opening and operation of the Escrow Account and special account referred to hereunder, and other related matters. The application for RBI approval for opening and operation of the Escrow Account and special account has been filed on April 13, 2006, and the application for RBI approval for the acquisition of Shares by the Acquirer under the Offer has been filed on April 21, 2006.

·          In the event of regulatory approvals not being received in a timely manner or litigation leading to a stay on the Offer, or SEBI instructing that the Offer should not proceed, the Offer process may be delayed beyond the schedule indicated in this Letter of Offer. Consequently, the payment of consideration to the Shareholders whose Shares have been accepted in the Offer as well as the return of the Shares not accepted by the Acquirer may be delayed.

·          The Acquirer makes no assurance with respect to the market price of the Shares during / after the Offer.

·          The Offer is for substantial acquisition of Shares along with acquisition of control of the Target Company, and it is made in accordance with Regulation 10 and Regulation 12 of the SEBI (SAST) Regulations.  There is no assurance with respect to the continuation of the past trend in the financial performance of the Target Company.

·          The Shares tendered in the Offer will be held in trust by the Registrar to the Offer till the completion of the Offer formalities, and the Shareholders will not be able to trade such Shares. During such period there may be fluctuations in the market price of the Shares. Accordingly, the Acquirer makes no assurance with respect to the market price of the Shares both during the Offer period and upon the completion of the Offer, and disclaims any responsibility with respect to any decision by any Shareholder on whether to participate or not to participate in the Offer.

·          In the event of oversubscription in the Offer, the acceptance of the Shares tendered will be on a proportionate basis and will be contingent on the level of oversubscription.

·          The Acquirer has not conducted any business activities or operations from the date of its incorporation (i.e. March 8, 2006), and therefore has not earned any major income till the date hereof.

The risk factors set forth above are not intended to cover a complete analysis of all risks as perceived in relation to the Offer or in association with the Acquirer and the PAC, but are only indicative. They do not relate to the present or future business or operations of the Target Company or any other related matters, and are neither exhaustive nor intended to constitute a complete analysis of the risks involved in the participation by a Shareholder in the Offer. The Shareholders are advised to consult their stockbroker, investment consultant or tax advisor, if any, for further risks with respect to their participation in the Offer.

 

INDEX
Sr. No.	Subject	Page
I	Disclaimer Clause	5
II	Details of the Offer	5
III	Background of the Acquirer / PAC	7
IV	Disclosure in Terms of Regulation 21(3)	11
V	Background of the Target Company	11
VI	Offer Price and Financial Arrangements	20
VII	Terms and Conditions of the Offer	23
VIII	Procedure for acceptance and settlement of the Offer	23
IX	Documents for inspection	26
X	Declaration by the Acquirer and PAC	26

 

 

KEY DEFINITIONS
Acquirer	TH Holdings, a company registered under the laws of the Republic of Mauritius
BSE	Bombay Stock Exchange Limited
CDSL	Central Depositary Services (India) Limited
CSE	Calcutta Stock Exchange Association Ltd.
DP	Depository Participant
Diluted Voting Capital	Total voting equity share capital of the Target Company, which will be 164,015,224 Shares as on June 20, 2006, assuming conversion of all Exercisable ESOPs
EDS	Electronic Data Systems Corporation, a listed company incorporated under the laws of Delaware
EDS Group	EDS and its direct and indirect subsidiaries
Escrow Account	Has the same meaning as defined in Paragraph 66
Exercisable ESOPs	Has the same meaning as defined in Paragraph 9
FEMA	Foreign Exchange Management Act, 1999
Form of Acceptance cum Acknowledgement	Form of Acceptance cum Acknowledgement
Letter of Offer	This Letter of Offer dated May 1213, 2006
Manager/ Manager to the Offer	Citigroup Global Markets India Private Limited
MphasiS	MphasiS BFL Limited
NRI	Non Resident Indian
NSE	National Stock Exchange of India Limited
OCB	Overseas Corporate Body
Offer	This voluntary conditional open offer being made to acquire 83,000,000 Shares representing 51.54% of the Share Capital (50.61% of the Diluted Voting Capital)
Offer Price	Rs. 204.50/- (Rupees Two Hundred and Four and Fifty Paise Only) per Share
Offer Size	83,000,000 Shares, representing in aggregate 51.54% of the Share Capital (50.61% of the Diluted Voting Capital)
PAC	Electronic Data Systems Corporation, the Person Acting in Concert with the Acquirer for the purpose of the Offer
Public Announcement	Announcement of the Offer by the Acquirer, made by the Manager to the Offer on behalf of the Acquirer and the PAC on April 4, 2006
RBI	The Reserve Bank of India
Registrar/ Registrar to the Offer	Karvy Computershare Private Limited
SEBI	The Securities and Exchange Board of India
SEBI (SAST) Regulations	The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, and subsequent amendments thereto
Share(s)	Fully paid-up equity share(s) of the Target Company, having a face value of Rs.10/- each
Share Capital	Total voting equity share capital of the Target Company, which as on April 4, 2006 was 161,037,934 Shares
Shareholders	All owners (registered or unregistered) of Shares
Specified Date	April 5, 2006
Target Company	MphasiS BFL Limited
Tax Clearance Certificate	Certificate from the Income Tax authorities to be submitted by NRIs/ OCBs/ foreign Shareholders, indicating the amount of tax to be deducted by the Acquirer under the Income Tax Act, 1961

CURRENCY OF PRESENTATION

I.         DISCLAIMER CLAUSE 

IT IS TO BE DISTINCTLY UNDERSTOOD THAT FILING OF THE DRAFT LETTER OF OFFER WITH SEBI SHOULD NOT IN ANY WAY BE DEEMED OR CONSTRUED THAT THE SAME HAS BEEN CLEARED, VETTED OR APPROVED BY SEBI. THE DRAFT LETTER OF OFFER HAS BEEN SUBMITTED TO SEBI FOR A LIMITED PURPOSE OF OVERSEEING WHETHER THE DISCLOSURES CONTAINED THEREIN ARE GENERALLY ADEQUATE AND ARE IN CONFORMITY WITH THE SEBI (SAST) REGULATIONS. THIS REQUIREMENT IS TO FACILITATE THE SHAREHOLDERS OF MPHASIS BFL LIMITED TO TAKE AN INFORMED DECISION WITH REGARD TO THE OFFER. SEBI DOES NOT TAKE ANY RESPONSIBILITY EITHER FOR FINANCIAL SOUNDNESS OF THE ACQUIRER, PAC OR THE TARGET COMPANY WHOSE SHARES ARE PROPOSED TO BE ACQUIRED OR FOR THE CORRECTNESS OF THE STATEMENTS MADE OR OPINIONS EXPRESSED IN THE LETTER OF OFFER. IT SHOULD ALSO BE CLEARLY UNDERSTOOD THAT WHILE THE ACQUIRER IS PRIMARILY RESPONSIBLE FOR THE CORRECTNESS, ADEQUACY AND DISCLOSURE OF ALL RELEVANT INFORMATION IN THIS LETTER OF OFFER, THE MANAGER TO THE OFFER IS EXPECTED TO EXERCISE DUE DILIGENCE TO ENSURE THAT THE ACQUIRER DULY DISCHARGES ITS RESPONSIBILITY ADEQUATELY. IN THIS BEHALF, AND TOWARDS THIS PURPOSE, CITIGROUP GLOBAL MARKETS INDIA PRIVATE LIMITED, THE MANAGER TO THE OFFER, HAS SUBMITTED A DUE DILIGENCE CERTIFICATE DATED APRIL 13, 2006 TO SEBI IN ACCORDANCE WITH THE SEBI (SAST) REGULATIONS AND SUBSEQUENT AMENDMENTS THERETO. THE FILING OF THE LETTER OF OFFER DOES NOT, HOWEVER, ABSOLVE THE ACQUIRER FROM THE REQUIREMENT OF OBTAINING SUCH STATUTORY CLEARANCES AS MAY BE REQUIRED FOR THE PURPOSE OF THE OFFER.

II.        DETAILS OF THE OFFER 

Background of the Offer

1.       This conditional open offer (“Offer”) is being made voluntarily by TH Holdings (the “Acquirer”) along with Electronic Data Systems Corporation (the “PAC”) to the Shareholders, in accordance with Regulations 10 and 12 of the SEBI (SAST) Regulations, for the purpose of substantial acquisition of Shares and voting rights of the Target Company accompanied with a change in control of the Target Company, as indicated herein.

2.       The PAC is the ultimate parent company of and the beneficial owner of 100% of the share capital of the Acquirer. Save and except the PAC, no other person is acting in concert with the Acquirer for the purpose of the Offer.

3.       The Acquirer and the PAC do not hold any Shares as of the date of this Letter of Offer and have not entered into any agreement/arrangement for the acquisition of Shares and/or change in control of the Target Company.

4.       The Acquirer, the PAC and the Target Company have not been prohibited by SEBI from dealing in securities, in terms of directions issued under Section 11B of, or any other regulations made under, the Securities and Exchange Board of India Act, 1992 ( the “SEBI Act”).

5.       Upon the successful completion of the Offer, the Acquirer intends to reconstitute and appoint its nominees as directors on the board of directors of the Target Company. As of the date of this Letter of Offer, the Acquirer has not finalized its representatives to be nominated on the board of directors of the Target Company.

6.       The Acquirer and the PAC have received a letter dated April 17, 2006 from Baring India Investments Limited, PCC (“Baring”) indicating Baring’s intent to tender its entire shareholding of 56,014,184 (Fifty Six Million Fourteen Thousand One Hundred and Eighty Four) Shares in the Offer, which constitute 34.78% of the Share Capital and 34.15% of the Diluted Voting Capital. It is clarified that Baring has merely indicated its intention to tender its entire shareholding in the Target Company in the Offer and has not given any guarantee, assurance or undertaking to that effect. Baring may or may not tender its Shares in the Offer.

Details of the Offer

7.       The Public Announcement announcing the Offer as per Regulation 15(1) of the SEBI (SAST) Regulations was made in the following newspapers on Tuesday, April 4, 2006:

 

Newspaper	Language	Editions
Business Standard	English	Mumbai, Ahmedabad, Bangalore, Kolkatta, Delhi, Hyderabad and Chennai
Pratakal	Hindi	Mumbai, Jaipur and Udaipur
Usha Kiran	Kannada	Bangalore
Lok Shakti	Marathi	Mumbai

 

A copy of the Public Announcement is available on SEBI’s website (https://www.sebi.gov.in).

8.       Any decision for an upward revision in the Offer Price by the Acquirer till the last date of revision (viz. May 25,  2006), or withdrawal of the Offer would be communicated by way of a public announcement in the same newspapers in which the Public Announcement had appeared. In case of an upward revision in the Offer Price, the Acquirer would pay such revised price for all the Shares validly tendered any time during the Offer and accepted under the Offer.

9.       The Offer is being made to acquire 83,000,000 fully paid-up equity shares (“Offer Size”) of face value Rs. 10/- each of the Target Company (each a “Share”) representing 51.54%[2] of the voting equity share capital of the Target Company as on April 4, 2006 (“Share Capital”). The Offer is being made at a price of Rs. 204.50 (Rupees Two Hundred and Four and Fifty Paise Only) for each Share (such price, the “Offer Price”), to be paid in cash in accordance with the SEBI (SAST) Regulations. As per information received from the Target Company, there were 7,365,830 outstanding Employee Stock Options (“ESOPs”) as on April 4, 2006 (the date of the Public Announcement), out of which 2,977,290 ESOPs could be exercised by June 20, 2006 (i.e. within 15 days of the closure of the Offer) (“Exercisable ESOPs”). Assuming full conversion of all Exercisable ESOPs into Shares, the share capital of the Target Company would be 164,015,224 (“Diluted Voting Capital”). Accordingly, based on the said information provided by the Target Company, as on April 4, 2006, the Offer Size would represent 50.61% of the Diluted Voting Capital.

10.    The Offer is conditional upon acceptance of the entire Offer Size of 83,000,000 Shares representing 51.54% of the Share Capital (50.61% of the Diluted Voting Capital). In case the number of valid Shares tendered in the Offer is less than the Offer Size, the Acquirer shall not accept any Shares tendered in the Offer.

11.    There are no partly paid-up Shares in the Target Company.

12.    If there is a competitive bid:

(i)     The public offers under all the subsisting bids shall close on the same date.

(ii)    As the Offer Price cannot be revised during 7 (seven) working days prior to the closure of the Offer / bids, it would, therefore, be in the interest of the Shareholders to wait till the commencement of that period to know the final offer price of each bid and tender their acceptance accordingly.

13.    There have been no competitive bids as of the date of the Letter of Offer.

14.    This Offer is being made to all Shareholders.

15.    The Shares to be acquired under this Letter of Offer are to be free from all liens, charges and encumbrances and will be acquired together with all rights attached thereto.

16.    No Shares have been acquired either by the Acquirer or the PAC since the date of the Public Announcement or during the 12-month period prior to the date of the Public Announcement.

Object of the Offer and future plans

17.    The PAC and its direct and indirect subsidiaries (the “EDS Group”) operates worldwide and has achieved a leading global position in the information technology (“IT”) and business process outsourcing (“BPO”) services industry.  A key objective of the EDS Group is to expand its current operations and investments in India in connection with its business strategy.  Acquiring a controlling interest in the Target Company would enable the EDS Group to facilitate the further realization of its strategy.

18.    The Acquirer therefore proposes to acquire a controlling interest in the Target Company. The Offer is made in compliance of and in accordance with Regulation 10 and Regulation 12 of the SEBI (SAST) Regulations.  The Offer is intended to give the Acquirer control over the Target Company.

19.    The Acquirer and the EDS Group would evaluate, based on various factors, the possibility of integrating the Target Company’s operations with the EDS Group’s operations in India, including a possible merger, assuming that the Offer is successful, subject to applicable law.

20.    Disclosure in terms of Regulation 16(ix)

The Acquirer currently has no plans to sell, dispose of or otherwise encumber any assets of the Target Company in the next two years, except to the extent required (i) for the purposes of restructuring or rationalization of assets, investments, liabilities or otherwise of the Target Company or (ii) in the ordinary course of business of the Target Company. It will be the responsibility of the board of directors of the Target Company to make appropriate decisions in these matters in accordance with the requirements of the business. Such approvals and decisions will be governed by the provisions of the relevant regulations or any other applicable laws or legislation at the relevant time. Further, during this period, other than in the ordinary course of business, the Acquirer undertakes not to sell, dispose of or otherwise encumber any substantial assets of the Target Company, except with the prior approval of the Shareholders.

III.      BACKGROUND OF THE ACQUIRER AND THE PERSON ACTING IN CONCERT 

TH Holdings (the “Acquirer”)  

21.    The Acquirer is an unlisted company incorporated on March 8, 2006, under the laws of the Republic of Mauritius. It has its registered office at Les Cascades, Edith Cavell Street, Port Louis, Republic of Mauritius. Tel : +230-212-9800; Fax : +230-212-9833.

22.    The PAC is the ultimate parent company and the beneficial owner of 100% of the share capital of the Acquirer.

23.    Since the Acquirer does not hold any Shares, the reporting requirements under Chapter II of the SEBI (SAST) Regulations are not applicable.

24.    The board of directors of the Acquirer and their addresses are as listed below:

    

Name	Address	Qualifications	Date of Appointment
Tom Haubenstricker	P.O. Box 260703 Plano, Texas 75026	Central Michigan University	March 23, 2006
David Hernandez	P.O. Box 356 Coppell, Texas 75019	University of Virginia University of Chicago (Law School)	March 23, 2006
Ashraf Ramtoola	4, Bis Church Street Port Louis, Mauritius	Graduated as Chartered Certified Accountant	March 21, 2006
Sandra Hew Khee	Church Road Pointe Aux Piments Mauritius	Institute of Chartered  Accountants in England and Wales professional exams, ATC London, England BA (Hons), Economics and Social Studies, specialising in Accounting and Finance, University of Manchester, England	March 21, 2006

Mr. Haubenstricker has been Vice President for Finance Administration of EDS since January 2003 with responsibility for EDS’ corporate business development and corporate planning and financial analysis organizations. He was Vice President of Strategic Planning and Business Development from January 2002 to January 2003 and Managing Director of Financial Planning and Reporting from 2000 to January 2002. Mr. Haubenstricker began his career with EDS when he joined EDS’ finance organization in 1985. He has held various financial accounting, planning and reporting positions in the United States and EMEA (EDS’ Europe, Middle East and Africa region).

Mr. Hernandez is Vice President of Tax for EDS. In this position, he is responsible for managing the global tax function of EDS, including worldwide tax compliance and reporting, worldwide tax audit and contro­versy management, tax research and planning, financial reporting for tax results, and tax policy coordination. Mr. Hernandez joined EDS in 1996 as senior tax counsel where he provided tax related legal advice on all aspects of U.S. and non-U.S. activities, including all mergers and acquisitions both within and outside the United States. In addition, Mr. Hernandez has represented EDS in its U.S. audits, appeals and controversies before the IRS and the IRS Administrative Appeals Division. Mr. Hernandez has over 13 years of work experience. Prior to joining EDS, he was in private law practice in Dallas with the law firms Hughes & Luce, LLP and Vinson & Elkins, LLP.

Mr. Ramtoola joined International Management (Mauritius) Ltd. (“IMM”) in November 1992 and is currently a Director of IMM. In this position, he is responsible for IMM’s client accounts, secretarial matters and marketing. He joined IMM as assistant General Manager and was appointed director in 1995. Mr. Ramtoola has over 18 years experience in auditing, accounting and tax, acquired in the UK and Mauritius. Prior to joining IMM, Mr. Ramtoola has also obtained training and implemented electronic point of sale system in supermarkets as Financial Controller of Saood Superstore, UK as also assisted in the setting up of a company involved in computer hardware and software as a freelance consultant. 

Ms. Hew Khee joined IMM in July 2004 and is a Client Relations Manager for IMM. In this position, she is responsible for managing relationships with IMM’s clients. Ms. Hew Khee has over 13 years experience in auditing and accounting, acquired in the UK and Mauritius, and 6 years experience at management level. Her experience ranges from the owner managed to the large, listed companies operating in various sectors such as finance (pension funds, investment funds, banking institutions), manufacturing, hospitality and leisure, agriculture, retail, construction and the global business sector.

None of the above directors are on the board of directors of the Target Company as on the date of this Letter of Offer.

25.    The shares of the Acquirer are not listed on any stock exchanges.

26.    The total shareholders’ equity of the Acquirer is US$1 (Rs. 44.61).

27.    Since the Acquirer has been recently incorporated, its revenues, net profit, book value, EPS and return on net worth are not ascertainable. The Acquirer has not commenced business operations and has not earned any income till date.

28.    The Acquirer has not promoted any company since its inception.

Electronic Data Systems Corporation (“EDS” or the “PAC”) 

29.    EDS is a listed company incorporated under the laws of Delaware and as mentioned above, is the ultimate parent company and beneficial owner of 100% of the share capital of the Acquirer.  Its predecessor was incorporated in Texas under the name “Electronic Data Systems Corporation” in 1962. It has its principal office at 5400 Legacy Drive, Plano, Texas 75024-3199. Tel : +1-972-605-6000; Fax : +1-972-605-5613.

30.    EDS is a leading global technology services company that delivers business solutions. EDS delivers a broad portfolio of IT and BPO services to clients in the manufacturing, financial services, healthcare, communications, energy, transportation, consumer and retail industries and to governments around the world. EDS founded the information technology outsourcing industry more than 40 years ago.

31.    Since EDS does not hold any Shares, the reporting requirements under Chapter II of the SEBI (SAST) Regulations are not applicable.

32.    EDS’ shareholding pattern as on March 1, 2006 is given below:

SI. No.	Shareholder’s category	Number of shares	% of shares
1.	Directors / Management	803,639	0.16%
2.	Institutional Investors *	478,500,000	93.00%
3.	Others *	35,209,878	6.84%
	Total outstanding shares	514,513,517

* EDS estimates institutional investors hold approximately 93% of its outstanding common stock, or approximately 478,500,000 shares. 

Based on filings with the United States Securities and Exchange Commission (“SEC”), shareholders holding more than 5% of the outstanding common stock of EDS on December 31, 2005 are as follows:

Name and address of beneficial owner	Number of shares beneficially owned	Percentage of common stock outstanding
Dodge & Cox 555 California St., 40th Floor San Francisco, CA 94104	66,666,548	12.8%
Hotchkiss and Wiley Capital Management, LLC 725 S. Figueroa St, 39th Floor Los Angeles, CA 90017	56,115,902	10.8%
AXA Financial, Inc. 1290 Avenue of the Americas New York, NY 10104	35,122,629	6.7%
State Street Bank and Trust Company 225 Franklin Street Boston, MA 02110	29,462,002	5.7%
Franklin Resources, Inc.  One Franklin Parkway San Mateo, CA 94403	26,189,555	5.0%

33.    The board of directors of the PAC and their mailing addresses are as listed below:

Name	Mailing address	Qualifications	Date of appointment
W. Roy Dunbar	5400 Legacy Drive, Plano, Texas  75024	Manchester University; Manchester Business School	October 19, 2004
Roger A. Enrico	5400 Legacy Drive, Plano, Texas  75024	Babson College	February 1, 2000
S. Malcolm Gillis	5400 Legacy Drive, Plano, Texas  75024	University of Florida; University of Illinois	July 17, 2005
Ray J. Groves	5400 Legacy Drive, Plano, Texas  75024	Ohio State University	June 7, 1996
Ellen M. Hancock	5400 Legacy Drive, Plano, Texas  75024	College of New Rochelle; Fordham University	February 16, 2004
Jeffrey M. Heller	5400 Legacy Drive, Plano, Texas  75024	University of Texas at Austin	March 20, 2003
Ray L. Hunt	5400 Legacy Drive, Plano, Texas  75024	Southern Methodist University	June 7, 1996
Michael H. Jordan	5400 Legacy Drive, Plano, Texas  75024	Yale University; Princeton University	March 20, 2003
Edward A. Kangas	5400 Legacy Drive, Plano, Texas  75024	University of Kansas	June 16, 2004
R. David Yost	5400 Legacy Drive, Plano, Texas  75024	U.S. Air Force Academy; University of California at Los Angeles	October 19, 2005

Details of the experience of the above directors and their ages as of April 13, 2006, are as follows:

W. Roy Dunbar, 45, has been a director of EDS since 2004.  He has been President, Global Technology and Operations of Master Card International since September 2004.  Mr. Dunbar had been President, intercontinental operations of Eli Lilly and Company, responsible for its Asia, Africa/Middle East, Latin America and the Confederation of Independent States operations from January 2004 to September 2004, and was a member of Eli Lilly’s senior management forum. He had served as Vice President of information technology and Chief Information Officer of Eli Lilly since 1999. Mr. Dunbar joined Eli Lilly in 1990. He is also a director of Humana Inc.

Roger A. Enrico, 61, has been a director of EDS since 2000.  He has been Chairman of the Board of DreamWorks Animation SKG, Inc. since October 2004 and is a former Chairman and Chief Executive Officer of PepsiCo, Inc. As Chairman of DreamWorks, he is involved in its investor relations, corporate strategic planning, marketing and promotional strategy, succession planning and employee development and oversees matters related to its corporate governance and Sarbanes-Oxley compliance. Mr. Enrico was Chief Executive Officer of PepsiCo, Inc. from April 1996 to April 2001, Chairman of the Board from November 1996 to April 2001, and Vice Chairman from April 2001 to March 2002.  He joined PepsiCo, Inc. in 1971, became President and CEO of Pepsi-Cola USA in 1983, President and CEO of PepsiCo Worldwide Beverages in 1986, Chairman and CEO of Frito-Lay, Inc. in 1991 and Chairman and CEO of PepsiCo Worldwide Foods in 1992.  Mr. Enrico was Chairman and CEO, PepsiCo Worldwide Restaurants, from 1994 to 1997.  He is also a director of Belo Corporation, DreamWorks Animation SKG, Inc. and The National Geographic Society. 

S. Malcolm Gillis, 65, has been a director of EDS since 2005.  He has served as Zingler Professor of Economics and University Professor at Rice University since June 2004.  Dr. Gillis was President of Rice University from 1993 to June 2004.  He is also a director of Halliburton Company, Service Corporation International and Introgen Therapeutics, Inc. 

Ray J. Groves, 70, has been a director of EDS since 1996.  He served as Senior Advisor of Marsh Inc., the insurance brokerage and risk management subsidiary of Marsh & McLennan Companies, Inc., from October 2004 to October 2005, Chairman and Chief Executive Officer from July 2003 to October 2004, President and Chief Executive Officer from January 2003 to June 2003, and President and Chief Operating Officer from October 2001 to January 2003.  Mr. Groves was Chairman of Legg Mason Merchant Banking, Inc. from March 1995 to September 2001.  He retired as Chairman and Chief Executive Officer of Ernst & Young LLP in September 1994, which position he held since 1977.  Mr. Groves is also a director of Boston Scientific Corporation and Overstock.com, Inc.  

Ellen M. Hancock, 62, has been a director of EDS since 2004. She was Chairman of Exodus Communications, Inc., a computer network and Internet systems company, from June 2000 to September 2001, Chief Executive Officer from September 1998 to September 2001 and President from March 1998 to June 2000. Exodus filed a voluntary petition under Chapter 11 of the federal bankruptcy laws in September 2001. Ms. Hancock was Executive Vice President, Research and Development, Chief Technology Officer of Apple Computer Inc. from July 1996 to July 1997. She previously was Executive Vice President and Chief Operating Officer of National Semiconductor and a Senior Vice President and Group Executive of International Business Machines Corporation. Ms. Hancock is also a director of Acquicor Technology Inc. Aetna Inc., Colgate-Palmolive Company and Watchguard Technologies, Inc.   

Jeffrey M. Heller, 66, rejoined EDS in March 2003 as President and Chief Operating Officer and a director.  He retired from EDS in February 2002 as Vice Chairman, a position he had held since November 2000. Mr. Heller served as President and Chief Operating Officer of EDS from 1996 to November 2000, Senior Vice President from 1984 to 1996, and Chairman of Unigraphics Solutions Inc. (then a subsidiary of EDS) from January 1999 to February 2001.  He joined EDS in 1968 and has served in numerous technical and management capacities.  Mr. Heller is also a director of Trammell Crow Company, Temple Inland Corp. and Mutual of Omaha. 

Ray L. Hunt, 63, has been a director of EDS since 1996.  Mr. Hunt has been Chairman of the Board and Chief Executive Officer of Hunt Consolidated Inc. and Chairman of Hunt Oil Company for more than five years.  He is a director of Halliburton Company and PepsiCo, Inc., a manager of Verde Group, LLC and Chairman of the Board of Directors of the Federal Reserve Bank of Dallas. 

Michael H. Jordan, 69, has been Chairman and Chief Executive Officer of EDS since March 2003.  He was Chairman and Chief Executive Officer of CBS Corporation (formerly Westinghouse Electric Corporation) from July 1993 until December 1998. Prior to joining Westinghouse, Mr. Jordan was a principal with the investment firm of Clayton, Dubilier and Rice from September 1992 through June 1993, Chairman of PepsiCo International from December 1990 through July 1992 and Chairman of PepsiCo World-Wide Foods from December 1986 to December 1990.  Mr. Jordan has been chairman of the board of directors of eOriginal, Inc. (electronic document services) since June 1999.  He is also a director of Aetna Inc.  

Edward A. Kangas, 61, has been a director of EDS since 2004.  He was Chairman and Chief Executive Officer of Deloitte Touche Tohmatsu from 1989 to 2000 and Managing Partner of Deloitte & Touche (USA) from 1989 to 1994.  Mr. Kangas began his career as a staff accountant at Touche Ross in 1967, where he became a partner in 1975. After his retirement from Deloitte in 2000, Mr. Kangas served as a consultant to Deloitte until 2004.  He is also the Chairman of the National Multiple Sclerosis Society and a director of Eclipsys Corporation, Hovnanian Enterprises Inc., Oncology Therapeutics Networks and Tenet Healthcare Corporation (for which he has served as non-executive Chairman since July 2003). 

R. David Yost, 58, has been a director of EDS since 2005.  He has been a director and Chief Executive Officer of AmerisourceBergen Corporation, a pharmaceutical services company, since August 2001 and President of AmerisourceBergen from August 2001 to October 2002.  Mr. Yost served as Chairman and Chief Executive Officer of AmeriSource Health Corporation from December 2000 to August 2001 and President and Chief Executive Officer of AmeriSource Health Corporation from May 1997 to December 2000.  He held a variety of other positions with AmeriSource Health Corporation and its predecessors since 1974, including Executive Vice President – Operations of AmeriSource Health Corporation from 1995 to 1997.

None of the above directors are on the board of directors of the Target Company as on the date of this Letter of Offer.

34.    EDS’ shares are listed on the New York Stock Exchange and the London Stock Exchange.

35.    As of December 31, 2005, EDS reported total outstanding common stock of 526,199,617 (including 2,913,605 treasury shares), US$0.01 par value and total shareholders equity of US$7,512 million (equivalent to Rs. 3,351,103 lacs). (Source, share and US$ amounts: SEC Filing).

As of April 12, 2006, the closing price of the common stock of EDS on the New York Stock Exchange was US$26.69 (equivalent to Rs. 1,190.64 per share). The market capitalization of EDS as of this date, based on the total outstanding common stock as on March 1, 2006, was US$13,723 million (equivalent to Rs. 6,126,008 lacs).

36.    Consolidated Financial Information of EDS

The consolidated financial information presented below was obtained from or calculated based on the audited financial statements of EDS, which are stated in accordance with the Generally Accepted Accounting Principles of the United States of America.

Consolidated Statements of Operations	31-Dec-2005		31-Dec-2004		31-Dec-2003
for the Years Ended	US$ mn	Rs. lacs	US$ mn	Rs. lacs	US$ mn	Rs. lacs
Revenues	19,757	8,813,598	19,863	8,860,884	19,758	8,814,044
Costs and expenses	19,215	8,571,812	19,965	8,906,387	20,013	8,927,799
Operating income (loss)	542	241,786	(102)	(45,502)	(255)	(113,756)
Interest and other expense, net	103	45,948	272	121,339	262	116,878
Income (loss) from continuing operations
before income taxes	439	195,838	(374)	(166,841)	(517)	(230,634)
Provision (benefit) for income taxes	153	68,253	(103)	(45,948)	(205)	(91,451)
Income (loss) from continuing operations	286	127,585	(271)	(120,893)	(312)	(139,183)
Income (loss) from discontinued operations	(136)	(60,670)	429	191,377	46	20,521
Cumulative effect on prior years of changes in
accounting principles, net of income taxes	-	-	-	-	(1,432)	(638,815)
Net income (loss)	150	66,915	158	70,484	(1,698)	(757,478)
Consolidated Balance Sheets as of	31-Dec-2005		31-Dec-2004		31-Dec-2003
	US$ mn	Rs. lacs	US$ mn	Rs. lacs	US$ mn	Rs. lacs
Liabilities and shareholders' Equity
Total current liabilities	5,048	2,251,913	5,289	2,359,423	7,570	3,376,977
Pension benefit liability	1,173	523,275	1,132	504,985	1,116	497,848
Long-term debt, less current portion	2,939	1,311,088	3,168	1,413,245	3,488	1,555,997
Minority interests and other long-term liabilities	415	185,132	715	318,962	728	324,761
Total shareholders' equity	7,512	3,351,103	7,440	3,318,984	5,714	2,549,015
Total liabilities and shareholders' equity	17,087	7,622,511	17,744	7,915,598	18,616	8,304,598
Assets
Total current assets	8,502	3,792,742	8,671	3,868,133	8,204	3,659,804
Property and equipment, net	1,967	877,479	2,181	972,944	2,818	1,257,110
Deferred contract costs, net	638	284,612	708	315,839	870	388,107
Investments and other assets	684	305,132	1,059	472,420	1,051	468,851
Goodwill	3,832	1,709,455	3,635	1,621,574	3,472	1,548,859
Other intangible assets, net	640	285,504	624	278,366	1,231	549,149
Deferred income taxes	824	367,586	866	386,323	970	432,717
Total assets	17,087	7,622,511	17,744	7,915,598	18,616	8,304,598

 

Other Financial Data	31-Dec-2005		31-Dec-2004		31-Dec-2003
	US$	Rs.	US$	Rs.	US$	Rs.
Dividend per share	0.20	8.92	0.40	17.84	0.60	26.77
Dividend (%)	2,000%		4,000%		6,000%
Basic earnings per share	0.29	12.94	0.32	14.28	(3.55)	(158.37)
Return on net worth (%)	2.0%		2.1%		(29.7)%
Book value per share	14.28	637.03	14.23	634.80	11.89	530.41

Note : Exchange rate used is the RBI reference rate as on April 3, 2006 (Rs. 44.61 / US$).

IV.     DISCLOSURE IN TERMS OF REGULATION 21(3)

The Offer is being made to acquire 83,000,000 Shares representing 51.54% of the Share Capital and 50.61% of the Diluted Voting Capital. Assuming full acceptance, the Offer will not result in the public shareholding in the Target Company falling below the limit specified for the purpose of listing on a continuous basis. Based on the latest annual report of the Target Company for the year ended March 31, 2005, the Target Company, prior to the date of the Letter of Offer, filed with the Calcutta Stock Exchange (“CSE”) an application for delisting of the Shares from the CSE, which application is pending approval.

V.       BACKGROUND OF THE TARGET COMPANY

All information in this section has either been provided by the Target Company or compiled from publicly available sources such as the Target Company’s annual reports, quarterly reports and website.

37.    The Target Company is a global IT and BPO services company.  The Target Company was incorporated on August 10, 1992. Pursuant to a scheme of arrangement involving MphasiS Corporation (a Delaware Corporation incorporated in 1998), MphasiS Holdings Ltd (incorporated under the laws of the Republic of Mauritius) and BFL Software Limited (incorporated in Bangalore under the Companies Act, 1956), MphasiS Corporation became a wholly owned subsidiary of BFL Software Limited with effect from June 15, 2000. Upon such merger, the shareholders of MphasiS Corporation received shares in  MphasiS Holdings Ltd (now known as Investek Mauritius Limited) which in turn received shares of BFL Software Limited. BFL Software Limited was renamed as MphasiS BFL Limited, such name change having effect from July 15, 2000. There have been no changes in the name of the Target Company since the aforesaid merger.

38.    The Target Company’s registered and corporate office is situated at 139/1, Hosur Main Road, Koramangala, Bangalore – 560 095. Tel: +91 80 2552 2713; Fax: +91 80 2552 2719.

39.    The Target Company is a global IT and BPO services provider to Global 2000 companies and assists its clients in innovating and streamlining their business processes by offering custom solutions for technology and operations outsourcing. The Target Company's expertise is focused on financial services, logistics and technology verticals and spans across architecture, application development and integration, application management and business process outsourcing, including the operation of large-scale customer contact centres.

40.    The Target Company has 17 development centres, 7 in Bangalore, 2 in Mumbai, one each in Pune, Mangalore, Ahmedabad, Noida, Shanghai (China), Slough (United Kingdom), Tijuana (Mexico) and Phoenix (United States of America).

41.    The total paid-up equity capital of the Target Company, as on April 4, 2006, was Rs. 16,104 lacs, divided into 161,037,934 Shares. There are no partly paid-up Shares or any convertible instruments (other than the ESOPs) as on April 4, 2006.

42.    Share capital structure of the Target Company as of April 4, 2006:

Paid-up equity Shares of the Target Company	No. of Shares	% of Shares
Fully paid-up equity shares	161,037,934	100
Partly paid-up equity shares	Nil	Nil
Total paid-up equity shares	161,037,934	100
Total voting rights	161,037,934	100

43.    The capital build-up for the Target Company since inception is as given below:

Date	Number of Shares Issued	% of post issue capital	Cumulative Share Capital	Mode of Allotment	Identity of Allottees	Status of Compliance
10-Aug-92	700	100.00	700	Opening Capital	Subscribers to Memorandum	Yes
18-Sep-93	4,500,000	99.98	4,500,700	Public Issue	Public	Yes
18-Sep-93	1,499,300	24.99	6,000,000	Preferential Allotment	Bangur Group	Yes
29-May-96	(16,600)	(0.28)	5,983,400	Forfeiture of Shares	Various	Yes
23-Jun-98	3,333,333	35.78	9,316,733	Preferential Allotment	Baring India Investment Limited	Yes
16-Nov-98	500	0.01	9,317,233	Re-Issue Of Shares	Various	Yes
9-Nov-99	10,000	0.11	9,327,233	ESOP Allotment	Employees	Yes
1-Dec-99	14,600	0.16	9,341,833	ESOP Allotment	Employees	Yes
10-Mar-00	6,500,000	41.03	15,841,833	Preferential Allotment	MphasiS Holdings Limited	Yes
1-Apr-00	1,000	0.01	15,842,833	ESOP Allotment	Employees	Yes
6-Jun-00	3,500	0.02	15,846,333	ESOP Allotment	Employees	Yes
20-Jun-00	1,900	0.01	15,848,233	Reissue of Forfeited Shares	Various	Yes
5-Sep-00	5,000	0.03	15,853,233	ESOP Allotment	Employees	Yes
14-Jul-01	1,285,715	7.50	17,138,948	Preferential Allotment	Winterfall Limited	Yes
5-Mar-02	4,000	0.02	17,142,948	ESOP Allotment	Employees	Yes
21-May-02	5,950	0.03	17,148,898	ESOP Allotment	Employees	Yes
22-Jul-02	125	0.00	17,149,023	ESOP Allotment	Employees	Yes
30-Aug-02	1,250	0.01	17,150,273	ESOP Allotment	Employees	Yes
21-Oct-02	98,276	0.57	17,248,549	ESOP Allotment	Employees	Yes
19-Dec-02	6,840	0.04	17,255,389	ESOP Allotment	Employees	Yes
22-Jan-03	33,151	0.19	17,288,540	ESOP Allotment	Employees	Yes
21-Mar-03	19,376	0.11	17,307,916	ESOP Allotment	Employees	Yes
5-May-03	6,885	0.04	17,314,801	ESOP Allotment	Employees	Yes
9-Jun-03	10,037	0.06	17,324,838	ESOP Allotment	Employees	Yes
9-Jul-03	17,309,638	49.98	34,634,476	Bonus Issue	Existing Shareholders	Yes
7-Aug-03	241,278	0.69	34,875,754	ESOP Allotment	Employees	Yes
12-Sep-03	59,100	0.17	34,934,854	ESOP Allotment	Employees	Yes
9-Oct-03	1,500	0.00	34,936,354	Release of Bonus Shares kept in Abeyance	Various	Yes
31-Oct-03	135,787	0.39	35,072,141	ESOP Allotment	Employees	Yes
20-Nov-03	69,928	0.20	35,142,069	ESOP Allotment	Employees	Yes
9-Jan-04	104,007	0.30	35,246,076	ESOP Allotment	Employees	Yes
1-Feb-04	89,128	0.25	35,335,204	ESOP Allotment	Employees	Yes
11-Feb-04	90,025	0.25	35,425,229	ESOP Allotment	Employees	Yes
26-Feb-04	2,800	0.01	35,428,029	Release of Bonus Shares kept in Abeyance	Various	Yes
26-Feb-04	106,967	0.30	35,534,996	ESOP Allotment	Employees	Yes
8-Apr-04	94,073	0.26	35,629,069	ESOP Allotment	Employees	Yes
4-May-04	16,740	0.05	35,645,809	ESOP Allotment	Employees	Yes
27-May-04	35,544,081	49.93	71,189,890	Bonus Issue	Existing Shareholders	Yes
6-Jul-04	2,338,778	3.18	73,528,668	Preferential Allotment	Shareholders of Kshema Technologies Limited	Yes
12-Jul-04	253,894	0.34	73,782,562	ESOP Allotment	Employees	Yes
17-Aug-04	160,359	0.22	73,942,921	ESOP Allotment	Employees	Yes
16-Sep-04	3,526,562	4.55	77,469,483	Preferential Allotment	Minority Shareholders of MsourcE Corp USA	Yes
11-Oct-04	11,200	0.01	77,480,683	Release of Bonus Shares kept in Abeyance	Various	Yes
11-Oct-04	109,919	0.14	77,590,602	Preferential Allotment	Optionholders of MsourcE Corp USA	Yes
11-Oct-04	209,987	0.27	77,800,589	ESOP Allotment	Employees	Yes
3-Nov-04	79,018	0.10	77,879,607	ESOP Allotment	Employees	Yes
10-Dec-04	312,378	0.40	78,191,985	ESOP Allotment	Employees	Yes
11-Jan-05	700	0.00	78,192,685	Release of Bonus Shares kept in Abeyance	Various	Yes
11-Jan-05	285,768	0.36	78,478,453	ESOP Allotment	Employees	Yes
22-Mar-05	121,455	0.15	78,599,908	ESOP Allotment	Employees	Yes
29-Apr-05	31,495	0.04	78,631,403	ESOP Allotment	Employees	Yes
10-Jun-05	195,552	0.25	78,826,955	ESOP Allotment	Employees	Yes
22-Jun-05	56,092	0.07	78,883,047	ESOP Allotment	Employees	Yes
30-Jun-05	74,508	0.09	78,957,555	ESOP Allotment	Employees	Yes
29-Jul-05	452,841	0.57	79,410,396	ESOP Allotment	Employees	Yes
26-Aug-05	141,447	0.18	79,551,843	ESOP Allotment	Employees	Yes
10-Sep-05	3,500	0.00	79,555,343	Release of Bonus Shares kept in Abeyance	Various	Yes
16-Sep-05	316,146	0.40	79,871,489	ESOP Allotment	Employees	Yes
14-Oct-05	133,040	0.17	80,004,529	ESOP Allotment	Employees	Yes
21-Oct-05	19,237	0.02	80,023,766	ESOP Allotment	Employees	Yes
28-Oct-05	107,300	0.13	80,131,066	ESOP Allotment	Employees	Yes
15-Nov-05	80,124,266	50.00	160,255,332	Bonus Issue	Existing Shareholders	Yes
25-Nov-05	155,794	0.10	160,411,126	ESOP Allotment	Employees	Yes
2-Dec-05	43,464	0.03	160,454,590	ESOP Allotment	Employees	Yes
19-Dec-05	26,748	0.02	160,481,338	ESOP Allotment	Employees	Yes
26-Dec-05	11,533	0.01	160,492,871	ESOP Allotment	Employees	Yes
12-Jan-06	63,710	0.04	160,556,581	ESOP Allotment	Employees	Yes
16-Jan-06	70,922	0.04	160,627,503	ESOP Allotment	Employees	Yes
20-Jan-06	12,163	0.01	160,639,666	ESOP Allotment	Employees	Yes
30-Jan-06	15,444	0.01	160,655,110	ESOP Allotment	Employees	Yes
3-Feb-06	22,431	0.01	160,677,541	ESOP Allotment	Employees	Yes
10-Feb-06	69,003	0.04	160,746,544	ESOP Allotment	Employees	Yes
17-Feb-06	120,454	0.07	160,866,998	ESOP Allotment	Employees	Yes
24-Feb-06	40,664	0.03	160,907,662	ESOP Allotment	Employees	Yes
3-Mar-06	5,784	0.00	160,913,446	ESOP Allotment	Employees	Yes
10-Mar-06	21,724	0.01	160,935,170	ESOP Allotment	Employees	Yes
17-Mar-06	37,796	0.02	160,972,966	ESOP Allotment	Employees	Yes
24-Mar-06	38,194	0.02	161,011,160	ESOP Allotment	Employees	Yes
3-Apr-06	26,774	0.02	161,037,934	ESOP Allotment	Employees	Yes

Note: The compliance mentioned above is filing of Form 2 with Registrar of Companies and, getting the shares listed with the respective Stock Exchanges.

44.    Till date, none of the stock exchanges on which the Shares are listed have ever suspended trading in Shares.

45.    There are neither any partly paid-up Shares nor outstanding convertible instruments except 7,365,830 ESOPs issued to the employees under the Target Company’s Employees Stock Offer Plan, 1998 Plan (version I), 1998 Plan (version II), 2000 Plan, 2003 Plan and 2004 Plan, as on April 4, 2006. 

46.    All the Shares are listed on the Bombay Stock Exchange Limited (“BSE”), the National Stock Exchange of India Limited (“NSE”), and the CSE. Based on the Target Company’s annual report for the year ended March 31, 2005, the Target Company filed an application with the CSE for the delisting of the Shares from the CSE, which application is pending approval. The Target Company has complied with all material provisions of the listing agreement entered into with the above-mentioned stock exchanges and no punitive action has been initiated by any of the stock exchanges against it.

47.    The Target Company has not received any directions from SEBI under Section 11B of the SEBI Act or under any of the regulations made under the SEBI Act, prohibiting them from dealing in securities. The Target Company has complied with applicable provisions of Chapter II of SEBI (SAST) Regulations within the specified time, in filing returns under Regulation 8(3) of the SEBI (SAST) Regulations.

48.    The board of directors of the Target Company are as listed below:

Name of the directors	Designation	Educational qualifications	Date of joining
Jaithirth Rao	Chairman and Managing Director	Masters degree from the University of Chicago and an MBA from the Indian Institute of Management, Ahmedabad	January 2000
N Subramaniam	Vice Chairman	Chartered Accountant, Cost Accountant, Company Secretary and an MBA from the Indian Institute of Management, Ahmedabad	June 1998
Ashish Dhawan	Director	MBA from Harvard University and a Bachelor of Science in Applied Mathematics and Economics from Yale University	June 2001
B R Menon	Director	Graduate in Commerce and Law from the Government Law College, Mumbai	June 1998
D S Brar	Director	Bachelor of Engineering (Electrical) from Thapar Institute of Engineering & Technology, Patiala, and a Masters in Management from Faculty of Management Studies, University of Delhi (Gold Medalist )	April 2004
Jeroen Tas	Director	MBA from the Free University of Amsterdam	July 2000
Dr. Jose de la Torre	Director	Doctor in Business Administration from  Harvard University, MBA (Management) and B.S. (Aerospace Engineering) from the Pennsylvania State UniversityDBA (International Business), Harvard University, MBA (Management), and B.S. (Aerospace Engineering), Pennsylvania State University (Source: www.anderson.ucla.edu)	June 2000
Nawshir H Mirza	Director	Chartered Accountant	January 2004
Rahul Bhasin	Director	MBA from the Indian Institute of Management, Ahmedabad	June 1998
Richard S Braddock	Director	Graduate from Dartmouth College with a degree in history, and an MBA degree from the Harvard School of Business Administration (Source: http://phx.corporate-ir.net)	June 2000

49.    The experience of the board of directors of the Target Company is as under:

Jaithirth Rao, Chairman and Managing Director. Jaithirth (Jerry) Rao is a seasoned veteran in Consumer and Corporate Financial Services and in Technology Management. He built and developed Citibank's Consumer businesses as the Country/Regional Manager in India, Middle East, Eastern Europe and UK. He earlier headed Citibank's Global Technology Development Division and their Global Electronic Cards Division. Jerry has testified before the U.S. Congress on e-commerce.  He is also on the boards of Cadbury India Limited, The Arvind Mills Limited, IDFC Asset Management Company Limited, Gabriel India Limited, Royal Orchids Hotels Limited, Rao Properties Pvt. Ltd., Sanvijay Tours and Travels Pvt. Ltd. and Bangalore Review and Magazines Co. Pvt. Ltd.  He is the Founder Member and Director of Development Gateway Foundation, USA, and a Trustee in NASSCOM Foundation, Sujay Foundation, India Foundation for the Arts and Mathematical Sciences Foundation.  He is also a Settlor and Executive Committee Member in IIMA Alumni Association Trust.

N Subramaniam, Vice Chairman. N Subramaniam is an investment partner for Baring India Private Equity Fund. Previously he was Chief Executive Officer of First India Asset Management Company Ltd. He is also on the boards of , B&M Hot Breads Pvt. Ltd, Secova eServices and Maples ESM Technologies Pvt Ltd.

Ashish Dhawan, Director. Ashish Dhawan is the Senior Managing Director of Chrysalis Investment Advisors (India) Private Limited. His previous assignments were with GP Investments, a private equity fund in Brazil and at McCown De Leeuw & Co., a private equity firm in the U.S. He is also on the boards of Chrys Capital I, LLC, Chrys Capital II, LLC, Chrys Capital III, LLC, Chrys Capital IV, LLC, Global Vantedge Inc., Global Vantedge (Mauritius), Ephinay Bermuda,  Chrysalis Investments Advisors (India) Private Limited, Ephinay India Private Limited, Global Vantedge (Bermuda), CM Investments, LLC, Global Vantedge (India) Private Limited, Yes Bank Limited, Suzlon Energy Limited, Simplex Infrastructures Limited and IVRCL Infrastructures and Projects Limited.

B R Menon, Director. B R Menon started his practice in the High Court of Delhi and is a leading legal practitioner in Delhi with over 19 years of experience in the field of law. Menon has dealt with cases in India and abroad (the Supreme Court of Victoria and the High Court of London).

D S Brar, Director. D S Brar started his career with Associated Cement Company and later joined Ranbaxy Laboratories Limited where he rose to the position of CEO and Managing Director. He is also on the boards of Reserve Bank of India, Suraj Hotels (P) Ltd, Madhubani Investments (P) Ltd, Suraj Overseas (P) Ltd, Green Vally Land and Development (P) Ltd, Davix Management Services Pvt Ltd, GVK Bio Sciences Pvt Ltd, GVK Davix Technologies Pvt Ltd and Inogent Laboratories Pvt Ltd and Member of Board of Governors in Indian Institute of Management, Lucknow.

Jeroen Tas, Director. Jeroen Tas is a co-founder of MphasiS. Before starting MphasiS he was with Citibank, heading Transaction Technology Inc, the subsidiary responsible for the design and development of the bank's distribution systems, such as ATMs, Internet and contact centers. He has worked for Digital Equipment and Philips Electronics in international marketing and project management positions in the USA, Europe and Asia.

Dr. Jose de la Torre, Director. Dr. Jose de la Torre is Dean of the Chapman Graduate School of Business at Florida International University, Miami, Florida and holds the Byron Harless Chair in Management.  . Dr. de la Torre was previously a professor of International business strategy at the Anderson School at UCLA and at INSEAD in France. He is also in the International Advisory Board of EDHEC in Lille and Nice, France

Nawshir H Mirza, Director. Nawshir Mirza is actively involved with Childline, an all-India NGO for abused & distressed children. He spent most of his career with Ernst & Young and its Indian member firm, S.R.Batliboi & Co, Chartered Accountants, and its predecessor firm, Arthur Young, being a Partner from 1974 to 2003. He has contributed to the accounting profession, being a Speaker or the Chairperson at a large number of professional conferences in India & abroad. He is also a Director on the boards of Esab India Limited, Tata Industries Limited, RPG Guardian Private Limited and Foodworld Supermarkets Limited.

Rahul Bhasin, Director. Rahul Basin is the Managing Partner for Baring India Private Equity Fund. Previously, he was a Fund Manager with Citibank Global Asset Management in London. Prior to moving to London, he was based in Citibank's Delhi office where he was in charge of Treasury. Rahul was earlier the Chairman of MphasiS BFL Limited.  He is also on the boards of Siro Clinpharm Pvt Ltd, Hindustan Oil Exploration Company Limited, Secova eServices and Baring Private Equity International.

Richard S Braddock, Director. Richard Braddock was a Non-Executive Chairman of an advertising agency True North Communications. He is currently the Chairman of MidOcean Partners, New York and Fresh Direct and worked previously with priceline.com as Chief Executive. From 1973 to 1992, he held a variety of positions at Citicorp and its principal subsidiary, Citibank, N.A., including President and Chief Operating Officer. He is also on the boards of Eastman Kodak Company, Cadbury Schweppes Plc and Marriott International.Jaithirth Rao, Chairman and Managing Director. Jaithirth (Jerry) Rao is a seasoned veteran in Consumer and Corporate Financial Services and in Technology Management. He built and developed Citibank's Consumer businesses as the Country/Regional Manager in India, Middle East, Eastern Europe and UK. He earlier headed Citibank's Global Technology Development Division and their Global Electronic Cards Division. Jerry has testified before the U.S. Congress on e-commerce. He is also on the boards of Cadbury India Limited, The Arvind Mills Limited, IDFC Asset Management Company Limited, Gabriel India Limited, Royal Orchids Hotels Limited, Rao Properties Pvt. Ltd., Sanvijay Tours and Travels Pvt. Ltd. and Bangalore Review and Magazines Co. Pvt. Ltd.  He is the Founder Member and Director of Development Gateway Foundation, USA, and a Trustee in NASSCOM, Sujay Foundation, India Foundation for the Arts and Mathematical Sciences Foundation.  He is also a Settlor and Executive Committee Member in IIMA Alumni Association Trust.

N Subramaniam, Vice Chairman. N Subramaniam is an investment partner for Baring India Private Equity Fund. Previously he was Chief Executive Officer of First India Asset Management Company Ltd. He is also on the boards of B&M Hot Breads Pvt. Ltd and Maples ESM Technologies Pvt Ltd.

Ashish Dhawan, Director. Ashish Dhawan is the Senior Managing Director of Chrysalis Investment Advisors (India) Private Limited. His previous assignments were with GP Investments, a private equity fund in Brazil and at McCown De Leeuw & Co., a private equity firm in the U.S. He is also on the boards of Chrys Capital I, LLC, Chrys Capital II, LLC, Chrys Capital III, LLC, Chrys Capital IV, LLC, Global Vantedge (Mauritius), Ephinay Bermuda, Chrysalis Investments Advisors (India) Private Limited, Global Vantedge (Bermuda), CM Investments, LLC, Global Vantegde (India) Private Limited, Yes Bank Limited and IVRCL Infrastructures and Projects Limited.

B R Menon, Director. B R Menon started his practice in the High Court of Delhi and is a leading legal practitioner in Delhi with over 19 years of experience in the field of law. Menon has dealt with cases in India and abroad (the Supreme Court of Victoria and the High Court of London).

D S Brar, Director. D S Brar started his career with Associated Cement Company and later joined Ranbaxy Laboratories Limited where he rose to the position of CEO and Managing Director. He is also on the boards of Reserve Bank of India, Suraj Hotels (P) Ltd, Madhubani Investments (P) Ltd, Suraj Overseas (P) Ltd, Green Vally Land and Development (P) Ltd, Davix Management Services Pvt Ltd, GVK Bio Sciences Pvt Ltd, GVK Davix Technologies Pvt Ltd and Inogent Laboratories Pvt Ltd and Member of Board of Governors in Indian Institute of Management, Lucknow.

Jeroen Tas, Director. Jeroen Tas is a co-founder of MphasiS. Before starting MphasiS he was with Citibank, heading Transaction Technology Inc, the subsidiary responsible for the design and development of the bank's distribution systems, such as ATMs, Internet and contact centers. He has worked for Digital Equipment and Philips Electronics in international marketing and project management positions in the USA, Europe and Asia.

Dr. Jose de la Torre, Director. Dr. Jose de la Torre is Dean at Florida International University, Miami, Florida and a Professor of International Business Strategy. Dr. de la Torre was previously a professor of International business at INSEAD in France and is also the Director of Proeza S A, Monterrey, Mexico.

Nawshir H Mirza, Director. Nawshir Mirza is actively involved with Childline, an all-India NGO for abused & distressed children. He spent most of his career with Ernst & Young and its Indian member firm, S.R.Batliboi & Co, Chartered Accountants, and its predecessor firm, Arthur Young, being a Partner from 1974 to 2003. He has contributed to the accounting profession, being a Speaker or the Chairperson at a large number of professional conferences in India & abroad. He is also a Director on the boards of Esab India Limited, Tata Industries Limited, RPG Guardian Private Limited and Foodworld Supermarkets Limited.

Rahul Bhasin, Director. Rahul Basin is the Managing Partner for Baring India Private Equity Fund. Previously, he was a Fund Manager with Citibank Global Asset Management in London. Prior to moving to London, he was based in Citibank's Delhi office where he was in charge of Treasury. He is also on the boards of Siro Clinpharm Pvt Ltd, Hindustan Oil Exploration Company Limited and Baring Private Equity International.

Richard S Braddock, Director. Richard Braddock was a Non-Executive Chairman of an advertising agency True North Communications. He is currently with MidOcean Partners, New York and worked previously with priceline.com as Chief Executive. From 1973 to 1992, he held a variety of positions at Citicorp and its principal subsidiary, Citibank, N.A., including President and Chief Operating Officer. He is also on the boards of Eastman Kodak Company, Cadbury Schweppes Plc and Marriott International.

50.    There are no representatives of the Acquirer or the PAC on the above-mentioned board of directors of the Target Company. Please note that any correspondence to the directors must be addressed to the registered office of the Target Company.

51.    Kshema Technologies Limited, a wholly owned subsidiary of the Target Company, was merged into the Target Company pursuant to a scheme of amalgamation with effect from April 1, 2005. The aforementioned scheme was approved by the High Court of Karnataka vide its order dated January 12, 2006, which was duly filed with the Registrar of Companies, Karnataka on January 27, 2006. 

52.    Brief audited / certified consolidated financial details of the Target Company are as follows:

(Rs. lacs)	Year Ended
Profit & Loss Statement	31-Mar-06	31-Mar-05	31-Mar-04
Income from operations	94,011	76,567	58,058
Foreign  exchange gain (loss)	852	683	1,472
Other Income	(87)	36	(9)
Total Income	94,776	77,287	59,520
Total Expenditure	74,201	62,446	46,502
Profit Before Depreciation, Interest and Tax	20,575	14,841	13,018
Depreciation	5,182	3,958	2,865
Interest Income	175	409	392
Profit Before Tax	15,568	11,292	10,546
Provision for Tax	582	(1,169)	688
Profit After Tax	14,986	12,462	9,858

 

(Rs. lacs)	Year Ended
Balance Sheet Statement	31-Mar-06	31-Mar-05	31-Mar-04
Sources of funds
Paid-up share capital	16,102	7,861	3,542
Reserves and Surplus  (excluding revaluation reserves)	49,219	55,263	31,379
Employee Stock Options Outstanding	738	858	146
Deferred Employee Stock Compensation expense	0	0	(10)
Net worth	66,059	63,981	35,057
Secured loans	369	463	268
Total	66,428	64,444	39,073
Uses of funds
Net fixed assets	14,553	11,979	10,252
Goodwill	26,765	34,918	915
Deferred Tax Assets	1,665	1,501	178
Net current assets	23,445	16,046	27,728
Total	66,428	64,444	39,073

 

	Year Ended
Other Financial Data	31-Mar-06	31-Mar-05	31-Mar-04
Dividend (%)	30%	45%	30%
Basic Earning Per Share (Rs.)	9.42	8.22	7.06
Return on net worth (%)	22.69%	19.48%	28.12%
Book Value Per Share (Rs.)	41.03	40.70	49.45

Notes:

(1) During the quarter ended December 31, 2005 (record date November 14, 2005), the Target Company allotted bonus Shares of one Share for every existing Share (1:1). Since the issue of bonus Shares is an issue without additional consideration, the issue is treated as if it had occurred at the beginning of the earliest period, for the purpose of calculating the basic EPS.

(2) Return on net worth has been computed by dividing Profit After Tax by Net worth.

(3) Book Value Per Share has been computed by dividing Net worth by Shares outstanding as at the end of the period. During the quarter ended December 31, 2005 (record date November 14, 2005), the Target Company allotted bonus Shares of one Share for every existing Share (1:1). Since the issue of bonus Shares is an issue without additional consideration, the issue is treated as if it had occurred at the beginning of the earliest period, for the purpose of calculating the Book Value Per Share.

Increase in revenues in FY2006 compared FY2005

During the year ended March 31, 2006 the revenues of the Target Company were Rs 94,011 lacs as compared to revenues of Rs 76,567 lacs during the year ended March 31, 2005, a growth of 22.8%. IT services revenues increased by 33.4% whereas BPO services revenue increased by 4.8%. Acquisitions made in the financial year 2004-05 helped increase the Target Company’s service offerings and expand its revenue base besides the volume growth in its core business areas. This was partially offset by volume discounts and change in revenue mix in BPO services.

Increase in profit after tax in FY2006 compared FY2005

The increase was primarily due to increase in revenues over and above the increase in cost of revenues and reduction in selling and general and administrative expenses as a percentage of revenues.

Increase in revenues in FY2005 compared FY2004

The increase in consolidated revenues in FY2005 was due to growth in BPO services, over 52%, attributable to increased volumes, which was in line with management strategy to ramp up the operations of BPO services. There was also an increase of 22.3% in revenues of IT services, which was attributable to an increase in the volume of business, as it added 71 new clients including the clients of Kshema Technologies Limited, a company acquired by the Target Company in June 2004.

Increase in profit after tax in FY2005 compared FY2004

The increase was primarily due to increase in revenues and increased economies of scale in the BPO business.

53.    Pre and Post-Offer shareholding of the Target Company

The shareholding before the Offer and after the Offer (assuming full acceptance of the Offer), based on the Share Capital, is given in the table below:

As on April 4, 2006

 

The total number of Shareholders in the Public category (as per (4) above) as on April 4, 2006 was 24,922.

The shareholding before the Offer and after the Offer (assuming full acceptance of the Offer), based on the Diluted Voting Capital, is given in the table below:

 

 

54.   The Target Company does not have any promoters. However, when BFL Software Limited was incorporated in 1992, the promoters were the Bangur Group and their associates who owned 1,504,800 shares as per the last holding by them and disposed the same in favour of Baring India Investments Limited in March 1998.

55.    The Target Company has been complying with the corporate governance requirements as are prescribed in Clause 49 of the Listing Agreement as amended from time to time.

Material litigation pending against the Target Company, as on March 31, 2006, is as follows:

a.       An income tax demand including interest in respect of the assessment year 2002-03 estimated at Rs. 6,043,000, net of provision made in the books, have been remanded for de novo adjudication to the Assessing Officer. Based on expert advice, the Target Company believes that it has a good case to defend and no further liability is expected to arise in this regard.

b.       Consequent to the order passed by the Karnataka High Court in favour of the Indian tax authorities in relation to a sales tax demand pertaining to the years 1996-97 to 2001-02 amounting to Rs 6,705,308 and interest & penalties of Rs 3,773,544, the Target Company has preferred an appeal to the Supreme Court. As a matter of prudence, the Target Company has made adequate provisions for the aforesaid amount.

56.    A. Sivaram Nair, Company Secretary is the Compliance Officer of the Target Company. Address: MphasiS BFL Limited, 139/1, Hosur Main Road, Koramangala, Bangalore – 560 095. Tel: +91 80 2552 2713; Fax: +91 80 2552 2719.

VI.     OFFER PRICE AND FINANCIAL ARRANGEMENTS

Justification of the Offer Price

57.    The Shares are listed on the BSE, NSE and the CSE. Based on the information available, the Shares are frequently traded on both the BSE and the NSE. Public information on the trading of Shares on the CSE is not readily available.

58.   The details of trading volumes of the Target Company on the BSE and the NSE are as provided below:

	Total Shares traded during the six calendar months prior to the month in which the Public Announcement was made	Total no. of listed Shares	Annualised trading turnover as a % of total number of listed Shares	Trading status in terms of the SEBI (SAST) Regulations
NSE	73,554,334	161,037,934	91.35%	Frequently Traded
BSE	26,110,146	161,037,934	32.43%	Frequently Traded
CSE	Nil	161,037,934	Nil	In-frequently Traded

Sources : www.nseindia.com and www.bseindia.com.

As the annualised trading turnover on the NSE and the BSE during the six month period prior to the date of the Public Announcement is more than 5% of the total number of listed Shares, the Shares are not infrequently traded on the NSE or the BSE as per the Explanation (i) to Regulation 20(5) of the SEBI (SAST) Regulations, with the NSE being the exchange where the Shares are most frequently traded.

59.    The Offer Price of Rs. 204.50/- per Share is justified in terms of Regulation 20(4) of the SEBI (SAST) Regulations as it is higher than the following:

a.       The highest price paid by the Acquirer and / or the PAC for any acquisition including by way of allotment in a public or rights or preferential issue during the 26 weeks prior to the date of Public Announcement	Not applicable
b.       The negotiated price	Not applicable
c.     The average of the weekly high and low of closing prices of the Shares on NSE during the 26-weeks preceding the date of the Public Announcement	Rs. 157.31/ Share
d.    The average of the daily high and low of the Shares on NSE during the 2-weeks preceding the date of the Public Announcement	Rs. 204.45/ Share

60.    The Shares are most frequently traded on NSE. The weekly high and low of the closing prices of the Shares, during the 26-week period ended April 3, 2006 (being the last trading date before the Public Announcement) on NSE, are given below:

Week #	End Date	High (Rs.)	Low (Rs.)	Average (Rs.)	Volume
1	Oct 10, 2005	129.60	128.00	128.80	1,078,916
2	Oct 17, 2005	129.85	128.50	129.18	2,870,657
3	Oct 24, 2005	128.65	125.15	126.90	1,544,406
4	Oct 31, 2005	127.43	121.83	124.63	935,069
5	Nov 7, 2005	129.93	124.78	127.35	696,049
6	Nov 14, 2005	132.05	127.50	129.78	1,716,074
7	Nov 21, 2005	130.25	127.00	128.63	4,069,700
8	Nov 28, 2005	143.60	129.85	136.73	4,295,782
9	Dec 5, 2005	143.75	139.15	141.45	4,261,739
10	Dec 12, 2005	153.60	148.40	151.00	5,872,810
11	Dec 19, 2005	154.85	145.90	150.38	2,312,590
12	Dec 26, 2005	153.20	146.65	149.93	1,761,620
13	Jan 2, 2006	151.40	146.60	149.00	1,649,154
14	Jan 9, 2006	157.40	150.60	154.00	3,530,486
15	Jan 16, 2006	162.90	153.35	158.13	4,145,667
16	Jan 23, 2006	164.60	158.25	161.43	1,841,283
17	Jan 30, 2006	170.55	164.65	167.60	2,810,198
18	Feb 6, 2006	174.60	172.75	173.68	2,152,693
19	Feb 13, 2006	173.30	171.00	172.15	849,615
20	Feb 20, 2006	176.55	172.85	174.70	2,407,588
21	Feb 27, 2006	179.30	175.45	177.38	1,906,427
22	Mar 6, 2006	188.05	173.60	180.83	2,832,809
23	Mar 13, 2006	193.40	177.35	185.38	3,490,497
24	Mar 20, 2006	213.05	189.35	201.20	6,503,018
25	Mar 27, 2006	205.00	198.05	201.53	3,591,776
26	Apr 3, 2006	215.35	201.15	208.25	4,427,711
		26 Weeks Average		157.31

Source : www.nseindia.com.

Note: Share prices prior to November 11, 2005 have been adjusted for a 1:1 bonus issue for the purposes of this calculation.

61.    The daily high, low and average prices of the Shares during the last 2 weeks of trading on the NSE, where Shares are most frequently traded, (as on the date of the Public Announcement) are given below:

Day #	Date	High (Rs.)	Low (Rs.)	Average	Volume
1	Apr 3, 2006	219.70	206.55	213.13	817,294
2	Mar 31, 2006	212.50	201.00	206.75	833,279
3	Mar 30, 2005	205.50	198.60	202.05	1,266,492
4	Mar 29, 2005	209.00	200.20	204.60	750,793
5	Mar 28, 2005	206.90	195.25	201.08	759,853
6	Mar 27, 2005	203.70	199.00	201.35	723,920
7	Mar 24, 2005	205.90	198.50	202.20	314,013
8	Mar 23, 2005	207.50	199.00	203.25	615,698
9	Mar 22, 2005	206.55	195.60	201.08	1,000,105
10	Mar 21, 2005	216.00	202.10	209.05	938,040
		2 Weeks Average		204.45

Source : www.nseindia.com.

On the basis of the above (i.e. paragraph 59, 60 and 61), the minimum offer price as per the SEBI (SAST) Regulations is Rs. 204.45 per Share. The Offer Price of Rs. 204.50/- per Share is higher than the same. Accordingly, the Offer Price is justified in term of Regulation 20(11) of the SEBI (SAST) Regulations.

62.   No acquisition of Shares will be made by the Acquirer or the PAC during the Offer period, except by way of fresh issue of shares of the target company, as provided for under Regulation 22(8) of the SEBI (SAST) Regulations.

63.    There is no non-compete agreement entered into by the Acquirer/ PAC with respect to this Offer.

64.   As per the SEBI (SAST) Regulations, the Acquirers can revise the Offer Price / Offer Size up to 7 (seven) working days prior to the closure of this Offer, and the revision, if any, would be announced in the same newspapers where the Public Announcement has appeared and the revised price will be paid for all Shares acquired pursuant to this Offer.

Financial Arrangements

65.    The total funds required under the Offer, assuming full acceptance, will be Rs. 1,697,35,00,000 (Rupees One Thousand Six Hundred and Ninety Seven Crores Thirty Five Lacs Only) (the “Maximum Consideration”).

66.    The Acquirer and the PAC propose to fund the Offer out of internally generated funds. By way of security for performance of its obligations under the SEBI (SAST) Regulations, pending receipt of the RBI approval for opening and operating an escrow account in India, the Acquirer has deposited in an escrow account with Citibank N.A., London Branch, located at Citigroup Centre, Canada Square, Canary Wharf, London, E14 5LB, United Kingdom (the “Escrow Account”), an amount of US$200,000,000 (United States Dollars Two Hundred Million Only) in cash (the “Cash Deposit”). The Cash Deposit, in equivalent Indian Rupees (as per the RBI reference exchange rate of Rs. 44.61/ US$ as on April 3, 2006; Source: www.rbi.org.in), of Rs. 89,220 lacs represents more than 50% of the Maximum Consideration in accordance with Regulation 28(2)(b) of the SEBI (SAST) Regulations. The Acquirer has undertaken to maintain the minimum of 50% of the Maximum Consideration in the Escrow Account at all times irrespective of the fluctuations in the exchange rate. In light of the aforesaid, if the number of valid Shares tendered in the Offer is less that the Offer Size, the Acquirer shall not accept any Shares tendered in the Offer. The application for RBI approval for opening and operation of the Escrow Account and special account has been filed on April 13, 2006, and the application for RBI approval for the acquisition of Shares by the Acquirer under the Offer has been filed on April 21, 2006.

67.    The Manager to the Offer has been duly authorized by the Acquirer to realize the value of the Escrow Account in terms of the SEBI (SAST) Regulations. The required funds will be transferred from the Escrow Account to Citibank N.A., D.N. Road Branch, Fort, Mumbai in India after the requisite approval has been obtained from RBI for opening and operating an escrow account in India. The Manager to the Offer has further been duly authorised by the Acquirer to realize the value of the escrow account with Citibank N.A. in India and overseas in terms of the SEBI (SAST) Regulations.

68.    In view of (i) the above Cash Deposit made by the Acquirer for 50% of the Maximum Consideration in order to fulfill the Acquirer’s obligations under the SEBI (SAST) Regulations, (ii) a cash balance of over US$1.0 billion as of December 31, 2005 being available to the PAC and (iii) additional confirmations received by the Manager to the Offer from the Acquirer and the PAC, the Manager to the Offer is satisfied (a) that firm arrangements are in place to fulfill the Acquirer’s obligations in relation to the Offer, and (b) with respect to the ability of the Acquirer to fulfill its obligations in relation to the Offer in accordance with the SEBI (SAST) Regulations.

69.    M/s V. C. Shah and Co., Chartered Accountants, having their address at Rajgir Chambers, 3^rd floor, Shahid Bhagat Singh Road, Mumbai 400 001.  Tel. No. +91 22 2263 4021; Fax No. +91 22 2266 2667 Membership No. 42649, have vide their certificate dated April 3, 2006 certified the adequacy of financial resources of the Acquirer and the PAC for fulfilling their obligations under the Offer.

VII.    TERMS AND CONDITIONS OF THE OFFER

70.    All Shares tendered and accepted under the Offer will be acquired by the Acquirer, subject to the terms and conditions set out herein. The Offer is conditional upon acceptance of 83,000,000 Shares (i.e. the entire Offer Size).  In case the number of valid Shares tendered in the Offer is less than the Offer Size, the Acquirer shall not accept any Shares tendered in the Offer. All necessary requirements for the valid transfer of the Shares will be the pre-conditions for valid acceptance. The Target Company does not have any outstanding Shares that are subject to lock-in.

71.    All Shareholders, whose names appear in the register of shareholders on the Specified Date and also persons who own Shares any time prior to the closure of the Offer, whether or not they are registered Shareholders, are eligible to participate in the Offer anytime before the closure of the Offer.

72.    The Offer is subject to the receipt of the approval of the RBI under the Foreign Exchange Management Act, 1999 and the rules and regulations made thereunder for each of (i) the acquisition of Shares by the Acquirer under the Offer; and (ii) the opening and operation of the escrow account and special account referred to herein, and other related matters. The application for RBI approval for opening and operation of the Escrow Account and special account has been filed on April 13, 2006, and the application for RBI approval for the acquisition of Shares by the Acquirer under the Offer has been filed on April 21, 2006.

73.    No approval other that the aforementioned approvals is required for the Acquirer to proceed with this Offer. If any other statutory approvals become applicable, the Offer would be subject to such statutory approvals. The Acquirer will have a right not to proceed with the Offer in terms of Regulation 27 of SEBI (SAST) Regulations in the event the statutory approvals indicated above are refused.  In case of a delay in receipt of any statutory approval(s), SEBI has the power to grant an extension of time to the Acquirer for payment of consideration to the tendering Shareholders, subject to the Acquirer agreeing to pay interest for the delayed period as directed by SEBI in terms of Regulation 22(12) of the SEBI (SAST) Regulations. Further, if the delay occurs on account of willful default or neglect or inaction or non-action by the Acquirer in obtaining the requisite approvals, Regulation 22(13) of the SEBI (SAST) Regulations will also become applicable.

VIII.  PROCEDURE FOR ACCEPTANCE AND SETTLEMENT OF THE OFFER

74.    The Acquirer along with the PAC made the Public Announcement on April 4, 2006 for the Offer. This Offer is made to all Shareholders.

75.    The Letter of Offer, together with the form of acceptance cum acknowledgement (“Form of Acceptance cum Acknowledgement”), will be mailed to the Shareholders, whose names appear on the register of members of the Target Company and to the beneficial owners of the dematerialised Shares, whose names appear as beneficiaries in the records of the respective depositories, at the close of business on April 5, 2006 (“Specified Date”).

76.    Holders of Shares in physical form who wish to tender their Shares will be required to send the Form of Acceptance cum Acknowledgement, original Share certificate(s), and transfer deed(s) duly  signed, to the Registrar to the Offer – Karvy Computershare Private Limited, 46, Avenue 4, Street No. 1, Banjara Hills, Hyderabad 500 034. Telephone number: (040) 2331 2454, Fax number: (040) 2331 1968, either by hand delivery on weekdays, or by Registered Post, on or before the closure of the Offer (i.e., no later than June 5, 2006), in accordance with the instructions to be specified in the Letter of Offer and in the Form of Acceptance cum Acknowledgement.

77.    The Registrar to the Offer, M/s Karvy Computershare Private Limited has opened a special depository account with Citibank N.A. at the National Securities Depositary Limited (“NSDL”) called, “Escrow Account – MphasiS Offer”. The DPID is IN 300054 and Client ID is 10016849.

DP Name	Citibank N.A.
DP	IN 300054
Client ID	10016849

Shareholders having their beneficiary account with the Central Depositary Services (India) Limited (“CDSL”) must use the inter-depository delivery instruction slip for the purpose of crediting their Shares in favour of the special depository account with NSDL.

78.    Beneficial owners (holders of Shares in dematerialized form) who wish to tender their Shares will be required to send their Form of Acceptance cum Acknowledgement along with a photocopy of the delivery instruction in “Off-market” mode, or counterfoil of the delivery instructions in “Off-market” mode, duly acknowledged by the Depository Participant (“DP”), in favour of the special depository account to the Registrar to the Offer – Karvy Computershare Private Limited, 46, Avenue 4, Street No. 1, Banjara Hills, Hyderabad 500 034. Telephone number: (040) 2331 2454, Fax number: (040) 2331 1968, either by hand delivery on weekdays or by Registered Post, on or before the closure of the Offer (i.e., no later than June 5, 2006), in accordance with the instructions to be specified in the Letter of Offer and in the Form of Acceptance cum Acknowledgement. The credit for the delivered Shares should be received in the special depository account on or before closure of the Offer (i.e., no later than June 5, 2006).

79.    In addition to the above-mentioned address, the Shareholders who wish to avail of, and accept the Offer can also deliver the Form of Acceptance cum Acknowledgement along with all the relevant documents at any of the collection centres below in accordance with the procedure as set out in the Letter of Offer. All the centres mentioned herein below would be open as follows:

Working Hours: Monday to Friday: 11.00 a.m. to 4.00 p.m. Saturday: 11 a.m. to 1 p.m.

Address	Contact Person	Mode of Delivery	Phone No.	Fax
16/22, Bake House Maharashtra Chamber of Commerce Lane, Opp. MSC Bank, Fort, Mumbai – 400 023	Ms. Nutan Shirke	Hand Delivery	022- 5638 2666 / 22842666	022- 56331135
7, Andheri Industrial Estate Off. Veera Desai Road, Andheri (W), Mumbai 400 053	Ms. Vishaka Shringarpure	Hand Delivery	022- 26730799 / 153	022- 26730152
SKANDA,  No. 59, Putana Road, Basavanagudi, Bangalore 560 004	Mr. Kishore	Hand Delivery	080-26621193/ 26621192	080-26621169
201-203 Shail Opp: Madhusudhan House, New Navrangpura Tel Exchange, Off CG Road, Ahmedabad 380 006	Mr. Edward	Hand Delivery	079-26420422/ 26400527/28	079-26565551
No. 33/1,Venkatraman Street, T.Nagar, Chennai-600 017	Mr. Gunashekhar	Hand Delivery	044-28151793/ 1794/4781	044-28153181
46, Avenue 4, Street No 1, Banjara Hills, Hyderabad – 500 034	Ms. A. Anitha	Regd. Post and Hand Delivery	040-23312454	040-23311968
49, Jatin Das Road, Near Deshpriya Park, Kolkata –700 029	Mr. Sujit Kundu	Hand Delivery	033-24634787-89	033-24644866/ 24634787
105-108, Arunachal Building, 19, Barakhamba Road, Connaught Place, New Delhi – 110 001	Mr. Michael George	Hand Delivery	011-23324401/ 23353835/981	011-23324621

80.    All Shareholders who own Shares anytime before the closure of the Offer are eligible to participate in the Offer anytime before the closure of the Offer.

81.    Unregistered owners can send their application in writing to the Registrar to the Offer, on a plain paper stating their name, address, number of Shares held, number of Shares offered, distinctive numbers, folio number, together with the original Share certificate(s), valid transfer deeds and the original contract notes issued by the broker through whom they acquired their Shares. No indemnity is required from unregistered owners.

82.    The Shares and all the other relevant documents should only be sent to the Registrar to the Offer and not to the Manager to the Offer, the Acquirer, the PAC, or the Target Company.

83.    Where the Acquirer is unable to make the payment to the Shareholders whose Shares have been accepted before the specified period of 15 (fifteen) days from the date of closure of the Offer due to non-receipt of requisite statutory approvals, SEBI, if satisfied that non-receipt of requisite statutory approvals was not due to any willful default or neglect of the Acquirer or failure of the Acquirer to diligently pursue the applications for such approvals, has the power to grant extension of time for the purpose, subject to the Acquirer agreeing to pay interest to the Shareholders for delay beyond 15 (fifteen) days, as may be specified by SEBI from time to time.

84.    In case of non-receipt of the Letter of Offer, eligible persons may send their application to the Registrar to the Offer, on a plain paper stating their name, address, number of Shares held, distinctive numbers, folio number and number of Shares offered along with documents as mentioned above so as to reach the Registrar to the Offer on or before the closure of the Offer (i.e., no later than June 5, 2006), or in case of beneficial owners, they may send the application in writing to the Registrar to the Offer, on a plain paper stating their name, address, number of Shares held, number of Shares offered, DP name, DP ID, beneficiary account number and a photocopy of the delivery instruction in “Off-market” mode or counterfoil of the delivery instruction in “Off-market” mode, duly acknowledged by the DP, in favour of the special depository account, so as to reach the Registrar to the Offer, on or before the closure of the Offer (i.e., no later than June 5, 2006).

85.    In terms of Regulation 22(5A) of the SEBI (SAST) Regulations, Shareholders desirous of withdrawing the acceptance tendered by them in the Offer may do so up to 3 (three) working days prior to the date of closure of the Offer. The withdrawal option can be exercised by submitting the documents as per the instructions below, so as to reach the Registrar to the Offer at any of the collection centres mentioned above as per the mode of delivery indicated therein on or before May 31, 2006.

a.       The withdrawal option can be exercised by submitting the form of withdrawal, enclosed with the Letter of Offer.

b.       In case of non-receipt of form of withdrawal, the withdrawal option can be exercised by making a plain paper application to the Registrar to the Offer along with the following details:

·          In case of physical Shares: name, address, distinctive numbers, folio number, and number of Shares tendered; and

·          In case of dematerialised Shares: name, address, number of Shares offered, DP name, DP ID, beneficiary account number and a photocopy of the delivery instruction in “Off-market” mode or counterfoil of the delivery instruction in “Off-market” mode, duly acknowledged by the DP, in favour of the special depository account.

86.    The Registrar to the Offer will hold in trust the Shares/Share certificates, Shares lying in credit of the special depository account, Form of Acceptance cum Acknowledgement, if any, and the transfer form(s) on behalf of the Shareholders who have accepted the Offer, till the cheques/drafts for the consideration and/ or the unaccepted Shares/Share certificates are dispatched/returned.

87.    If the aggregate of the valid responses to the Offer exceeds the Offer Size of 83,000,000 Shares (representing 51.54% of the Share Capital and 50.61% of the Diluted Voting Capital), then the Acquirer shall accept the valid applications received on a proportionate basis in accordance with Regulation 21(6) of the SEBI (SAST) Regulations. The Shares are compulsorily traded in dematerialized form and hence minimum acceptance will be 1 (one) Share. The market lot of the Shares is 1 (one) Share.

88.    Unaccepted Share certificates, transfer forms and other documents, if any, will be returned by Registered Post at the Shareholders’/ unregistered owners’ sole risk, to the sole/ first Shareholder/ unregistered owners. Unaccepted Shares held in dematerialised form will be credited back to the beneficial owner’s depository account with the respective depository participant, as per the details furnished by the beneficial owner in the Form of Acceptance cum Acknowledgement.

89.    Shareholders who have sent their Shares for dematerialization need to ensure that the process of getting their Shares dematerialized is completed well in time so that the credit in the special depository account is received on or before the date of closure of the Offer (i.e., no later than June 5, 2006), else their application would be rejected.

90.    While tendering the Shares under the Offer, Non Resident Indians (“NRIs”) /Overseas Corporate Bodies (“OCBs”) /foreign Shareholders will be required to submit the previous RBI Approvals (specific or general) that they would have obtained for acquiring the Shares. In case previous RBI approvals are not submitted, the Acquirer reserves the right to reject such Shares tendered.

While tendering Shares under the Offer, NRIs/ OCBs/ foreign Shareholders will be required to submit a tax clearance certificate (“Tax Clearance Certificate”) from the Income Tax authorities, indicating the amount of tax to be deducted by the Acquirer under the Income Tax Act, 1961, (the “Income Tax Act”) before remitting the consideration. In case the aforesaid Tax Clearance Certificate is not submitted, the Acquirer will arrange to deduct tax at the rate as may be applicable to the category of the Shareholder under the Income Tax Act, on the entire consideration amount payable to such NRI/ OCB/ foreign Shareholder.

As per the provisions of Section 196D(2) of the Income Tax Act, no deduction of tax at source shall be made from any income by way of capital gains arising from the transfer of securities referred to in section 115AD of the Income Tax Act payable to a Foreign Institutional Investor as defined in section 115AD of the Income Tax Act.

IX.     DOCUMENTS FOR INSPECTION

The following documents will be available for inspection to the Shareholders at the registered office of the Target Company, whose address is given on the cover page of this document, between 11 a.m. and 4 p.m. on all working days (except Saturdays and Sundays) till the Offer closing date[3]:

a.       Certificate of Incorporation, Memorandum and Articles of Association and Articles of Association of the Acquirer.

b.       Certificate dated April 3, 2006 from V. C. Shah & Co., Chartered Accountants, regarding the adequacy of financial resources with the Acquirer to fulfill the Offer obligation.

c.        Annual Reports of the Target Company for the accounting years ended 31 March 2003, 31 March 2004 and 31 March 2005.

d.       Annual Reports of the PAC for the financial years ended December 31, 2003, December 31, 2004 and December 31, 2005.

e.       Copy of a certificate from Citibank N.A., London confirming the amount placed in Escrow, towards the proposed Offer, with a lien in favour of Citigroup Global Markets India Private Limited, Manager to the Offer.

f.         Copy of letter received from SEBI, Ref. Nos. CFD/DCR/TO/AT/66229/06 dated May 4, 2006, in terms of proviso to Regulation 18(2).

g.       Copy of the agreement with the Depository Participant for opening a Special Depositary account for the purpose of the Offer.

h.       Published copy of Public Announcement made on April 4, 2006 by the Acquirer for acquiring up to 83,000,000 issued equity Shares of the Target Company.

i.         Printed copy of the webpage of the National Stock Exchange and the Stock Exchange, Mumbai, containing the Share price and volume data for the relevant period.

X.       DECLARATION BY THE ACQUIRER AND PERSON ACTING IN CONCERT

The Acquirer accepts responsibility for the information contained in this Letter of Offer (other than information in relation to the Target Company, which has been compiled from publicly available sources or received from the Target Company, and/or information received from the Registrar to the Offer) and also for its obligations laid down in the SEBI (SAST) Regulations and subsequent amendments made thereto.

The Directors of the Acquirer accept full responsibility for the information contained in this Letter of Offer (other than information in relation to the Target Company, which has been compiled from publicly available sources or received from the Target Company, and/or information received from the Registrar to the Offer). The Acquirer and PAC shall be jointly and severally responsible for ensuring fulfillment of their obligations under with the SEBI (SAST) Regulations.

All information contained in this document is as on the date of the Public Announcement, unless stated otherwise.

Mr. Tom Haubenstricker has been authorized by both TH Holdings and Electronic Data Systems Corporation to sign the Letter of Offer.

 

For and on behalf of

 

TH Holdings                                                                                          Electronic Data Systems Corporation

sd/-                                                                                                         sd/-

 

Tom Haubenstricker                                                                           Tom Haubenstricker                                                                                                            

 

Place: Plano, Texas

 

Date: May 1213, 2006.

Encl:

1.       Form of Acceptance cum Acknowledgement

2.       Form of Withdrawal

3.       Transfer Deed for Shareholders holding Shares in physical form